Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

SEC Chairman Mary Schapiro gave testimony before a House committee yesterday to provide updates on the implementation of the JOBS Act and the status of rulemaking that is required under the JOBS Act.

Not surprisingly, Ms. Schapiro announced that the SEC would not meet its July 4, 2012 deadline to revise Rule 506 and Rule 144A to remove bans on general solicitation and general advertising under certain circumstances.  Ms. Schapiro noted that she had “stated to Congress prior to the passage of the Act [that] time limits imposed by the JOBS Act are not achievable.”  While she characterized the 90 day time frame for implementing the revisions to Rules 506 and 144A as not realistic, Ms. Schapiro did indicate that the SEC has made significant progress and will accomplish its objective “in the very near future.”

The testimony includes updates on a variety of phases of the rulemaking, but one of the most interesting topics (to me) was the testimony regarding the way the SEC is actively increasing the prominence and effectiveness of economic analysis in the rulemaking process.  Back in April Ms. Schapiro reported on efforts to develop new staff guidance on economic analysis.  A draft framework of that new guidance is currently being used by rulemaking teams.  In Ms. Schapiro’s words:

“I am told that the Guidance is improving both the rule writing process and the substance of the economic analysis.  [Division of Risk, Strategy, and Financial Innovation] economists are more deeply involved in the development of rule recommendations and in conveying and explaining the economic consequences of particular choices.  I expect that the Commission’s forthcoming rules will reflect this increased collaboration and attention to economic analysis.”

Ms. Schapiro noted that the SEC’s commitment to economic analysis in the rulemaking process continues to grow, as 16 new economists will be joining rulemaking teams in the near future, and an additional 20 economists are expected to be hired in fiscal 2013.

Check frequently for updated information on the JOBS Act, the Dodd-Frank Act and other important securities law matters.

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